Body shop owners in the U.S. often grapple with whether to join insurance Direct Repair Programs (DRPs). In theory, the prospect of a busy shop that’s fed new customers on autopilot sounds like an attractive way to grow your business. The reality is that DRPs can be a risky agreement for your auto body shop if not managed properly. We want to help ensure your shop has the knowledge to make sure you come out ahead, no matter what you choose.
What is a direct repair program?
A direct repair program (DRP) is a partnership agreement between an auto insurer and a repair shop where an insurer directs claimants to specific body shops in exchange for the shop’s agreement to follow insurer requirements on pricing, repair methods, parts, and service standards.
How DRPs work and what shops are required to do
When a shop becomes part of an insurer’s DRP network (often called an accredited, preferred, or authorized direct repair shop list), it must meet criteria set by the insurance company.
DRP shops are typically required to have trained/certified technicians and proper equipment, maintain high customer service ratings, and offer solid warranty terms.
Insurers will publicly state that their network shops are vetted, held to performance standards, and must provide a workmanship warranty on repairs for as long as the customer owns the vehicle.
Many insurers also mandate industry certifications. For example, State Farm’s Select Service program requires at least one or two technicians to earn advanced welding certifications (steel and aluminum) from I-CAR in every DRP shop. These requirements ensure partner shops have up-to-date training and tools.
Claims Process Integration
In a DRP arrangement, the claims and repair processes are tightly integrated. Insurers may allow their DRP shops to handle vehicle damage estimates and begin repairs without waiting for an insurance adjuster, expediting the cycle and getting the customer’s car back to them faster.
The shop coordinates with the insurer’s claims department via online systems, and repairs are completed under the insurer’s approved estimate and guidelines. For instance, State Farm’s Select Service program lets customers get an estimate at the DRP shop and complete repairs, and State Farm will pay the shop directly.
DRP shops are typically connected to insurer software for estimate review, electronic approvals, and tracking of repair status. This means less hassle for customers (as they mainly deal with a single point of contact) and often faster approvals.
Insurers tout these programs as “one-stop” or “concierge” style experiences, such as GEICO Auto Repair Xpress shops with a GEICO adjuster or rep on-site to streamline inspections and answer questions.
Performance Metrics and Monitoring
Insurers hold DRP shops accountable through strict Key Performance Indicators (KPIs), typically tracking:
- Estimating accuracy
- Cycle time (repair speed)
- Quality metrics (rework rates, supplement frequency)
- Customer Satisfaction Index (CSI) scores
Shops failing to meet these benchmarks risk reduced referrals or removal from the network. This performance pressure often requires dedicated staff to manage administrative requirements and reporting.
Insurer-Directed Pricing and Parts
By joining a DRP, a shop agrees to follow the insurer’s repair guidelines and pricing. This can include using the insurer’s preferred parts sourcing (often aftermarket or recycled parts when available) and adhering to cost-controlling measurements.
Discounts and lowered hourly rates are part of the terms insurers request with automotive body shops. Insurers commonly require price concessions in DRP contracts: for example, fixed labor rates, limits on paint and material charges, discounts on parts, and even waiver of some fees (towing, storage, etc).
As a result, DRP shops have less flexibility in pricing each job – they must honor the contracted rates even if their standard (non-DRP) rate is higher. They also may need insurer approval for any repair method that strays from what the insurer considers baseline.
In many programs, parts selection is a key area: the shop might be required to try less expensive options first (e.g., aftermarket bumpers or salvage assemblies) before using new OEM parts unless an exception is justified.
Some progressive DRP agreements allow a high percentage of OEM parts, but those are usually specially negotiated. For instance, one shop owner negotiated a Geico DRP agreement that let him use ~88% OEM parts – more than the typical DRP would – in exchange for other concessions.
Customer Experience Expectations
Insurers heavily market the benefits of choosing a DRP shop to their customers, and the shop must deliver on these promises. Common selling points include a guaranteed completion date, status updates, assistance with rental car arrangements, and a lifetime warranty on repairs. To the consumer, these guarantees incentivize them to choose the DRP.
The body shop is expected to provide fast, convenient, and hassle-free service to satisfy the policyholder.
If a DRP shop fails to meet these expectations, it reflects poorly on both the shop and the insurer that recommended it. Therefore, participating shops must be ready to handle customers in a “concierge” manner—picking up and delivering vehicles, fast-tracking estimates, and promptly addressing any issues.
Pros of Being a DRP Shop
Joining one or more DRP networks can offer significant business advantages. Here are some key benefits that many DRP-participating shops cite.
1. Steady Volume of Repair Jobs
The primary value of becoming a DRP is a reliable, high volume of work. Insurers “steer” their policyholders toward DRP shops for estimates and repairs, providing a consistent stream of customers without the shop having to market to each one.
In 2020, DRP claims made up an astounding 90% of collision repair revenue, and 82% of insured customers went with a DRP shop to handle their repair.
While we’ll discuss these trends later, it’s safe to say that insurers direct a significant portion of business to auto repair shops.
2. Reduced Need for Advertising and Sales Effort
Along with volume, DRPs provide a built-in customer pipeline that lowers the shop’s cost of customer acquisition. Instead of spending heavily on advertising or relying solely on word-of-mouth, a DRP shop gets customers funneled directly from the insurer. This means the shop can allocate fewer resources to marketing and more to production while maintaining a new customer pipeline.
Think of it like outsourced marketing: the insurance company markets their business, and when one of their customers needs a repair, they promote your business to the customer.
3. Faster Cycle Times & Streamlined Processes
DRP shops tend to have quicker repair cycle times, benefitting both the shop and the customer. Because DRP shops often start repairs immediately (no waiting days for an adjuster to inspect) and use pre-approved estimating guidelines, the overall claim moves faster.
According to J.D. Power data, the average time from first notice of loss to vehicle delivery is about 11.6 days for DRP shops vs. 16 days for non-DRP shops.
For the shop, a faster cycle means vehicles spend fewer days in the facility, improving throughput and potential profitability (the shop can handle more jobs per month).
Additionally, payment is faster: insurers usually pay DRP shops via electronic funds transfer promptly upon repair completion, rather than the shop waiting for a check or chasing the customer for the bill. Quicker payment improves cash flow.
4. Improved Customer Satisfaction & Insurer Support
Working within a DRP can boost a shop’s customer satisfaction ratings due to the convenience and guarantees offered. Insurer programs often come with strong customer assurances like the nationwide lifetime warranty on repairs and guaranteed completion dates. Customers appreciate the “hassle-free” nature of DRP repairs – they drop off the car, and the insurance/shop handles the rest, often even coordinating rental car pickup.
Happy customers translate to good online reviews and repeat business. One DRP-participating owner observed that doing repairs “by the book” (properly) under a DRP earned great customer reviews and referrals – those satisfied customers then referred friends and family who were not tied to an insurer program, broadening the shop’s client base.
5. Higher Efficiency and Scale Economies
The high volume and standardized processes of DRP work can drive a shop to become more efficient and cost-effective. The logic is that increased volume can offset the lower margins per job by spreading overhead across more revenue.
A shop handling many insurer jobs can invest in better production management and possibly implement lean techniques or specialized teams (teardown, body, paint) to handle throughput.
Some successful multi-shop operators have built their business model around insurer relationships, processing high volumes very efficiently at lower per-unit cost – a feat smaller non-DRP shops may struggle with.
As long as the DRP volume is sufficient, a savvy shop can maintain profitability through productivity gains and by upselling or performing unpaid operations in a time-efficient manner.
Cons of Being a DRP Shop
Despite the clear benefits, DRP participation also comes with significant challenges and downsides that body shop owners must weigh.
1. Lower Profit Margins & Pricing Concessions
Perhaps the biggest complaint among DRP shops is reduced profitability per repair. To be on an insurer’s program, shops must accept contractually discounted rates and often perform certain tasks for free as “value adds.”
The math can get ugly. Many DRP repair shops struggle for viability, meaning the shop either takes a financial hit or cuts corners to make up the difference.
This amplifies the shop’s need to be experts at collision damage estimating. If a shop underestimates a repair, it may have to eat significant costs for additional parts and labor to perform the job correctly.
Thin margins on DRP work mean a shop must run extremely efficiently to profit, and even then, the net profit % is often lower than on independent jobs. If volume dips, DRP-heavy shops can quickly find themselves in the red.
2. Loss of Autonomy in Repair Decisions
DRP contracts inherently involve a loss of control for the shop. The insurer becomes, in effect, a silent (but strong) influence on how the shop operates on each repair.
The insurance partner might override the shop’s preferred repair method – an insurer field adjuster or audit may insist on a cheaper procedure (repairing a part instead of replacing, using filler instead of pulling a dent fully, etc.) to save cost.
This type of micromanagement can wreak havoc on production and cause the shop to redo work at its own expense.
While insurance company intervention can happen at a non-DPR shop, those shops don’t feel as much need to cater to the insurance company or worry about what could happen if they bite the hand that feeds them.
3. Administrative Burden and Performance Pressure
Participating in DRPs comes with a hefty administrative overhead. Shops must document every step, follow detailed program procedures, and communicate constantly with the insurer’s systems. The extra paperwork (uploading photos, writing reports on supplements, handling customer surveys, etc.) raises the shop’s operating costs.
Some DRP shops feel they do work that the insurance company’s staff would otherwise handle (writing initial estimates, processing total loss evaluations, arranging rentals).
While this is part of the DRP deal, it means a time sink for staff. If a shop has several DRP relationships, it multiplies – each insurer might have its own portal and quirks to manage.
4. Potential Quality Compromises
Many shop owners worry that DRP demands can lead to cutting corners on repairs. When profit margins are squeezed and speed is of the essence, something has to give.
While it’s certainly possible to repair vehicles correctly under DRP constraints, the risk is that to stay profitable, a shop might skip certain procedures that aren’t being paid for or use a less expensive part that isn’t truly equal to OEM, which ultimately leaves the repair shop liable.
DRP agreements often exacerbate these liability issues because insurers may insist on aftermarket structural or safety parts or on repair methods that go against OEM.
The shop is left in a bind: either fight for the proper repair (which can delay the job and anger the insurer), or give in and risk doing something sub-standard.
Many DRP shops do push back when safety is at stake, but the fact remains that the DRP model incentivizes cost-cutting, which can subtly erode quality if not vigilantly managed.
5. Dependence and Business Risk
While DRPs feed you work, they can also hold your business hostage. If an insurer decides to terminate the DRP contract or shift volume to another shop, your repair volume can plummet overnight.
Many shops that went “all in” on DRPs later realized they had forgotten how to acquire new customers independently. This dynamic can make a shop feel captive to the insurer.
Moreover, no DRP contract guarantees volume – if claim frequency drops or the insurer adds more shops to the network, your share can decline without recourse. This uncertainty is a risk factor.
Many seasoned shop owners advise not to let any one DRP exceed a certain percentage of your business for this reason. We recommend that shops continue to market their services and not rely too heavily on DRPs.
Making the Right DRP Decision for Your Shop
In recent years, more auto body shops have chosen to forego the DRP model for many of the reasons we mentioned above. The increased burden and lower profit margins have made the once-attractive business model nearly unfeasible.
Insurance companies are also adjusting, letting more body shops write the quotes instead of their adjusters. They’re also partnering with OEM-certified repair facilities and sending more work to certain non-DRP shops.
The decision to join a Direct Repair Program should align with your business model, operational strengths, and long-term goals.
For shop owners, especially newer ones, there is an alternative to the DRP partnerships for growing your auto shop business.
Many successful shops maintain a hybrid approach—participating in select DRPs while continuing to cultivate direct customer relationships. This balanced strategy provides volume stability while preserving independence and profitability.
Partner with ABE Paints to Grow Your Refinishing Business
Running a successful autobody repair shop can be a complicated balancing act—it’s about building strong relationships, staying ahead of industry trends, and constantly improving your operations. But with the right approach, your autobody shop can stand out, earn repeat business, and build a loyal customer base.
ABE Paints has been working with local auto body shops, hobbyists, fleets, and commercial companies for decades now. We know our stuff – and we love to use our expertise to help you grow your business!